Though the auto bailout is being widely defended in the political realm as a jobs-saving measure, the industry sees the rescue’s value in precisely the opposite light, as industry and supplier execs rate “capacity rationalization” as the most positive effect of the bailout. And, reports Automotive News [sub], Ford and GM could still end up cutting as many as six more plants over the next few years as questions linger about volume recovery in the larger market. Of the three GM plants likely to be shut down, the former Saturn plant at Spring Hill, TN, is the most likely to survive as it includes a paint shop, a small engine plant and associated parts manufacturing facilities. In contrast, analysts note that GM’s Janesville, WI, plant is the firm’s oldest and is therefore far less likely to survive, and its Shreveport, LA, compact truck plant is part of “Old GM” and will likely be liquidated. Similarly, Ford’s Ranger plant in Minnesota, as well as its Avon, OH Econoline plant and its Flat Rock, MI Mustang plant could face shutdowns. Ranger is running out of production, Econoline has been losing share to Ford’s more-efficient Transit Connect, and Mustang has been losing market share to Camaro while facing a Mazda pullout from the Flat Rock plant.

Because GM is adding jobs at other plants, the net job loss from its three likely shutdowns (two of which are currently idle) could be relatively low, but then cost savings aren’t likely to match those accrued by past shutdowns either. Ford, meanwhile, is facing a bit more disruption if Mazda pulls out of Flat Rock, but could accrue more savings than GM as only the Ranger plant is scheduled to lose its production. In any case, the UAW will have to weigh its desire to keep plants open with its desire to mitigate the inequity of the two-tier wage system… as well as its desire to gain board seats. All of which could make the UAW’s upcoming bargaining session (not to mention the political debate about the auto bailout) much more interesting…

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15 Comments on “UAW Fights Likely Plant Closures...”

I think Ford’s plans to discontinue the Ranger are a mistake in an otherwise solid business plan. Why not revamp it? There are thousands of buyers out there who would love a new ranger, especially if a new and efficient 4 cylinder Ecoboost engine was offered!

Agreed. Of course, I haven’t purchased a new vehicle since 1996, rendering my opinion moot, but I can’t help but think the North American market, with its penchant for trucks and SUVs would only be more and more interested in smaller trucks.

It should be noted that “capacity rationalization” has not stopped Ford and GM from expanding their production and assembly facilities in Mexico and Canada, as well as new ventures in other countries all over the globe. This, as opposed to utilizing their US facilities and the UAW, and exporting those products to other countries. Their problem is with the US market and the UAW, and their strategy should be to capitalize on the areas, outside of the US, where they are, or will be, making money, both now, and in the foreseeable future. I would like to see ALL current auto manufacturers in the US, foreigners included, move more plants to northern Mexico, and import their products to the US under NAFTA, like we do with Canadian-made vehicles. This would create more job opportunities for Mexicans, and keep them home rather than coming over here illegally. A side benefit would be that the manufacturers would see a marked increase in quality and an increase in their profits from Mexican-made goods, as they already have seen with their vehicles currently made in Mexico. The UAW had their chance and they blew it miserably ending with the death of GM and Chrysler. Only by the grace of the US taxpayers are these two losers able to keep the lights on, and Chrysler is not even a US company.

Mexico currently has various FTAs with other countries that the US doesn’t have. That opens the door for some extra export sales that probably wouldn’t happen if the vehicle is built in the US using the UAW.

There is one very big caveat to moving production to Northern Mexico at this juncture. The security situation continues to deteriorate, especially in Northern Mexico, as the entire country heads towards an ungovernable mess.

If northern Mexico is too iffy for the US car makers because of security reasons, there is always central Mexico, southern Mexico, the whole of Central America, and finally, Brazil and South America. But the closer to the US border would be the better, IMO. The US currently enjoys an enormous trade exchange with Mexico, all of which is trucked or sent by rail across the southern US border with Mexico or the Texas border with Mexico further down south. Much of it runs north along US54, about 5 miles from my house. All this and the current security situation notwithstanding. The point is that the American car makers now assembling in Mexico have enjoyed enormous gains in quality control and profits that they have not enjoyed in the past and cannot enjoy in the future if they continue to manufacture in the US, for whatever reasons. What John Horner says about the Canadian single healthcare system is true, but many Canadians in real need of quality healthcare continue to come to America because the waiting lines are so long in Canada. Obviously they want you to die before they have to fork over the money for your medical needs. One of my neighbors recently had a relative from Canada stay with him so that he could have stents implanted in his heart artery in an outpatient procedure lasting less than an hour, going in through his groin artery. He had been waiting in Canada for six months before coming to the US. In order for Ford and GM to make money, they’ve got to sell. And in order to sell they have to produce quality merchandise that has sufficient profit built in for them to be able to make money. Maybe that’s why they have adopted the Toyota business model and are producing in the countries where they sell. Expanding the good thing they’ve got going for them by producing in Mexico is highly advisable. I would buy a Ford product made in Mexico before I’d buy one made in the US. I have owned many a Ford and GM product made in the US, and have had all the fun I could stand fixing them over the years. I have heard no complaints about any of the Ford or GM products made in Mexico. In fact, all I have heard is praise from my friends selling them for a living. Not so with Ford and GM products made in the US. Those still require warranty visits to get them right, to this day. My 2011 Tundra 5.7 was made in San Antonio, TX, and even though I have not had any problems with it so far, I expect it to be no better in the long run than my 2006 F150 and my old Silverado. I don’t anticipate any problems with my wife’s 2008 Highlander AWD because it was made in Japan. The UAW may want to fight future plant closings because plant closings are not in their interests. But it is a necessary part of the restructuring of the American auto industry, as is moving production to locations that have a proven track record for quality and profitability.

Canadian factories enjoy massive cost savings compared to the US thanks to their single payer health care system. Health care insurance in the US can easily cost a company $1500-$2000 per covered employee/family per month if the employee is age forty or greater.

Given the headline of this post, I’m still looking for any text that says anything about the UAW actually fighting plant closures. While the speculation in the last paragraph is valid, it really ought to back up the premise in the title.